This food startup bounded back after the pandemic and expects to double revenue in the next two years. Read on to find out how Foozo made a pandemic-proof pivot.
Foozo has always had a listening ear when it comes to customer needs. The scale-up started out as Grouplunch, with the first business model being to incentivise workers to eat lunch in restaurants.
When co-founders Raphael Rosenberg and Torsten Jansen realised staff were afraid of losing their parking space when going out of the office for lunch, they flipped the model on its head and offered food delivery to offices and industrial complexes.
The firm started with two delivery vehicles, and a handful of restaurants, serving a customer base that grew out of former colleagues, working through various pain points as they went.
By 2016, the firm had a product-market fit and a small base of clients, but the company did not have the necessary means to address it properly.
This same year, the company appointed new CEO Pierre V. Pereira da Silva, who also joined as a co-founder, investing in the venture. The company raised €500K in 2017, and grew rapidly, to generate €400K in monthly revenue in 2020.
“We found ourselves in this founder grind where you do everything yourself. We needed a leader from outside–a fresh pair of eyes to help us build the business in a way that welcomed high growth and scalability for the future,” recalls Rosenberg.
In 2018, the firm raised a further €250K, began to develop a fleet of electric delivery vehicles and moved into its current warehouse to build its ghost kitchen, in Hamm. At the start of 2020, the company was experiencing 7% month compound growth, until covid-19 forced the government to impose a lockdown, from 15 March onwards.
“We were close to a death sentence,” Rosenberg recalls of the period. “Covid was like a bomb. Our main clients were in the offices. There were no people in the offices, revenue fell by 70% in a matter of days.”
The company, which was responsible for 60 employees, went from a monthly positive EBITDA of €25k with no debt, to sensible operational losses per month.
“In April, May and June 2020, due to the sudden impact of covid-19, we burned through €200k just to survive,” says Pierre V. Pereira da Silva.
15 new products in six weeks
The company had been saving the capital for a real estate project that was quickly shelved.
“We met every day within all-hands meetings, and there were only two things I wanted: ideas for totally new products, and ideas on how to bring additional revenue within the existing structure, to avoid laying people off,” the CEO said.
The firm developed 15 new products in six weeks, tested 5 of those products in the market. From these five, two of them remain today and are central to Foozo’s strategy.
Among other activities, Foozo also began leveraging its logistics and technology capacity to provide smart logistic services to large groups active in the food segment.
One of the products launched during the crisis is the company’s fastest growing product: Foozo Market – intelligent fridges. The service is aimed at corporate customers, who have intelligent fridges installed in their facilities as a complement or replacement for a canteen, for their staff.
The intelligent fridges are equipped with sensors, providing data on which meals have been removed and which need to be restocked. The meals are prepared by Pascal Henrot, Foozo’s in-house Michelin-starred chef, at its Hamm warehouse.
Changing working environment
“I believe that it [intelligent fridges] will represent 50% of our gross profit in three years,” Pereira da Silva says, adding: “The working environment has changed dramatically within the last years, and so did employee expectations. People no longer want solely a lunch solution at work, they expect more. In order to attract and retain the best talents, businesses must truly take care of what they are providing within their workspaces, take care of their people. With our product, we allow employers to amaze their staff.”
Looking to the future, Foozo expects to continue offering logistics services for restaurant partners through its food delivery platform. “We want to be able to offer diversity, and our delivery platform offers 1,200+ different meals to our customers. We could never do that internally” the CEO says.
He added: “We also can never replace, let’s say, a genuine Indian restaurant or an Italian restaurant where you have generations of families honing their method. We are very respectful towards that, and this is why we believe our delivery platform Foozo.lu will remain a core product, no matter how fast the new products are growing.”